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Unity Software (U) to Post Q1 Earnings: What's in the Cards?

Unity Software U is set to report first-quarter 2023 results on May 10.

The company expects first-quarter revenues to be between $470 million and $480 million, up 47-50% year over year. The Zacks Consensus Estimate is pegged at $477.42 million, indicating an increase of 49.13% from the year-ago quarter’s reported figure.

The consensus mark is pegged at a loss of 5 cents per share, reflecting no change in the past 30 days.

Unity’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters (matched twice and missed once). It delivered a negative earnings surprise of 22.5%, on average.

Unity Software Inc. Price and EPS Surprise

Unity Software Inc. Price and EPS Surprise
Unity Software Inc. Price and EPS Surprise

Unity Software Inc. price-eps-surprise | Unity Software Inc. Quote

Factors Likely to Influence First-Quarter Results

Unity’s first-quarter top line is expected to have benefited from steady demand for its software solutions from content creators like game developers, architects, automotive designers and filmmakers.

Strong adoption of U’s subscription-based Create Solutions and Operate Solutions is likely to have driven the momentum.

Unity has been expanding its platform by introducing new product capabilities. This is likely to have been a major growth driver.

Steady demand for interactive, real-time 2D and 3D content for mobile phones, tablets, PCs and virtual reality devices is likely to have aided the company’s top line.

Acquisitions of Parsec and SyncSketch, which enable cloud-based, secure collaboration between separated creators and artists, are expected to have driven top-line growth.

Key Developments in the First Quarter

This Zacks Rank #3 (Hold) company announced that it is planning to release a generative artificial intelligence (AI) marketplace for video game developers who regularly spend considerable resources on building assets like sound effects and characters. With Unity’s marketplace, developers will be able to use technology like artwork generator to instantly create content. You can see the complete list of today’s Zacks #1 Rank stocks here

The big gaming giants, which have already started investing in AI, are Tencent TCEHY, NetEase NTES and The NFT Gaming Company NFTG.

Chinese video game studios are rushing to invest in AI-generated content. NetEase, the second largest video game service provider has announced ChatGPT-like service in Justice Online, its flagship mobile game. Tencent is already using AI to improve gaming contents like character movements in its games.

The NFT Gaming Company recently announced that it has acquired AI assets of Voxpow and will integrate the same in its gaming portfolio. Voxpow is known for its AI-powered speech-recognition technology with natural language processing that identifies more than 100 languages and variants.

AI is believed to be the future of the gaming industry. Along with making it easier for video game developers to develop new games, this is expected to create a more interactive and personalized experience for the gamers as well.

Unity also launched a teaser video showing how software developers can type a text like "add two seconds of thunder" or "make them flying alien mushrooms" and the codes will be generated, without having to create them manually from scratch.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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